Margma: Rise in glove costs will be passed on to customers
We are making this statement early so that all stakeholders can be prepared to expect higher glove prices in the months ahead as it is inevitable and that such incremental cost would have to be passed on to the buyers as it would be difficult for the manufacturers to bear.
KUCHING: Glove manufacturers will likely tweak their prices to match up with rising costs in the wake of the steep rise in natural gas price, escalating costs ofpackaging materials, weakening US dollar, higher chemical cost and the annual incremental cost relating to wages and the new governmental policies.
According to Malaysian Rubber Glove Manufacturers Association (Margma) president Denis Low, it is a handful of increased costs for which, the rubber glove industry will normally pass it on to international buyers and consumers.
“We are making this statement early so that all stakeholders can be prepared to expect higher glove prices in the months ahead as it is inevitable and that such incremental cost would have to be passed on to the buyers as it would be difficult for the manufacturers to bear,” he said in a statement yesterday.
This was in response to an announcement of a hike in the price of gas last week for cooking and fuel by the industrial and commercial sectors effective next year.
“The steep rise in the natural gas price of about 22.9 per cent will mean an additional cost of about US$0.60 to US$1.00 depending on the glove type,” Low added.
“Margmacan understand the gradual subsidy removal by the government as part of its subsidy rationalisation program – but a 22.9 per cent increase is rather steep as we need to be mindful of competition from our neighbours.”
Low noted that the escalating cost of packaging materials is mainly due to a sheer lack of recyclable material as readership of newspapers and magazines has dwindled at an alarming rate worldwide.
Denis Low, Margma president
He further noted that this shortage of recyclable material will continue in the months ahead, thus pushing up the price of boxes.
“This year alone has seen prices moving up thrice, culminating to date an increase in price by about 32 per cent. This will mean an additional cost of about US$0.20 to US$0.30 per carton of 1,000pcs of gloves depending on box type,” he underlined.
“The US dollar is expected to be weaker against the ringgit as oil prices soar and in the months ahead, we can see some volatility in the exchange rates.
“Margmamembers need to factor in this element of fluctuating exchange and lock in the rates to secure their margins. We believe this is something which the glove manufacturers are very adept at.
“The chemical cost has also gradually increased and is another contributing element to higher cost of production.
“It is also obvious that manufacturers will also have to factor in the annual incremental cost of wages as well as the Government imposed Employee Insurance Scheme (EIS) and the impending revision of the minimum wage policy.”
Low is very confident that Margmamembers, who are all very seasoned and experienced, can easily manage this situation and that they will be able to work through these inevitable increases in cost of about US$1.00 to US$1.50 per 1,000pcs with their customers.
“Buyers and eventually the consumers will appreciate that Malaysian gloves are still very affordable and is of the highest quality, taking into consideration that we have been the world’s largest producer of medical and surgical gloves for more than two decades.
Malaysia is controlling about 65 per cent of total world demand and is poised to deliver about 152 billion pieces of gloves to more than 190 countries worldwide.
“On another note, it is going to be a record year for glove manufacturers as worldwide demand for medical and surgical glove is extraordinary with all manufacturers running at optimum capacities and an oversold position.
“This is brought on mainly by acute healthcare consciousness, regulatory requirement to wear gloves in developed and developing nations and the crack-down of vinyl glove factories in China due to environmental issues,” Low said.
Malaysia stands to reap in RM16.2 billion in revenue this year, he said, having achieved RM7.95 billion in the first six months.